sustainable investment
Sustainability watch: plant-based nylon, melting ice sheets and green hydrogen
Our selection of sustainability news from April includes landmark regulations and targets set across Europe, as well as examples of companies using alternative raw materials and forming sustainability partnerships.
There was continued reaction to the US Inflation Reduction Act, with Canada warning its ally against waging a “carbon subsidy war”. EU countries gave final approval to a law that will end sales of new CO2-emitting cars by 2035 and also sanctioned a major revamp of Europe’s carbon market.
Company names are provided for information purposes only – these businesses are not necessarily held in our portfolio or among investment recommendations.1
New UK plan to reach net zero goal faces criticism. The government unveiled a net zero plan in March that has faced criticism from experts and environmental groups. The document was drawn up after the High Court ruled that Britain’s existing measures for reaching net zero by 2050 were insufficient. Scientists say even this plan will not move the country closer to meeting legally binding commitments. A central plank of the strategy is to store CO2 under the North Sea.
The International Court of Justice will assess the legal obligations of states to protect current and future generations from climate change after countries backed a resolution at the United Nations. The advisory opinion of the ICJ, the UN’s top legal body, could increase the risk of litigation for countries failing to adhere to international laws and treaties, while providing guidance to governments about what they must do to defend human rights and the environment from climate harm.
Antarctica’s melting ice sheet could retreat much faster than anticipated, new research suggests. The evidence comes from markings on the seafloor off Norway that record the pullback of a melting European ice sheet thousands of years ago. Ice losses from Antarctica caused by climate change have already pushed up the surface of the world's oceans by nearly 1cm since the 1990s.
Athletic apparel company lululemon athletica announced its first products to be made using renewably sourced, plant-based nylon instead of nylon made from fossil fuels. The launch of two high-performance shirts follows nearly two years of collaboration with sustainable materials-focused biotechnology company Genomatica (Geno).
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Thematic link: The transition to a low-carbon and climate-resilient economy will require innovation, commitment and significant investment. Click here to find out more. |
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EU countries gave final approval to the biggest revamp to date of Europe’s carbon market, which is set to make it more costly to pollute and sharpen the bloc’s main tool for cutting emissions. The world’s first major carbon trading system has forced power plants and factories since 2005 to buy permits when they emit CO2, and it has cut emissions from those sectors by 43%. EU members approved a deal to reform the carbon market to cut emissions by 62% from 2005 levels by 2030.
UK commits to strengthening the Emissions Trading Scheme (ETS). The commitments will extend Britain’s ETS to 2050 and may expand it to more sectors. The plans are part of the government’s relaunched net zero strategy announced in late March. The UK ETS is a cap-and-trade system that sets declining annual emission limits for the country’s energy and industrial sectors, and a corresponding amount of carbon allowances that can be traded among businesses.
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Thematic link: Carbon pricing is a key enabler of the transition to a CLIC® economy. We believe an active carbon strategy can help investors capture attractive return opportunities while hedging transition risks in their portfolios. Click here for more information. |
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Legislators reached an agreement on 30 March on the EU’s renewable energy directive. The development brings to a close an 18-month process to upgrade the bloc’s climate policies and achieve a 55% net reduction in greenhouse gas emissions by 2030. It includes a legally binding target to raise the share of renewables in the EU’s overall energy consumption to 42.5% by 2030.
Iberdrola, one of the largest clean-energy companies, is teaming up with Amazon.com to support development of renewable energy projects and leverage cloud computing in the energy transition. The companies will collaborate on new wind and solar capacity by signing power purchase agreements (PPAs) for projects in Europe, the U.S. and Asia-Pacific.
India plans to give green hydrogen fuel producers incentives worth at least 10% of their costs under a USD 2bn scheme set to begin before the end of June, a top government official told Reuters. New Delhi approved a 174.9 billion-rupee incentive plan this year to promote green hydrogen.
Canada’s natural resources minister warned the US against waging a “carbon subsidy war” with allies, saying the Biden administration’s USD 369bn clean-energy package creates an “unlevel playing field” in global trade. A senior member of Justin Trudeau’s Liberal government said Canada and Europe were seeking to match the Inflation Reduction Act and its handouts for clean energy developers, but acknowledged that they would struggle to compete.
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Thematic link: Click here to find out more about the sectors that are well-placed for the renewables transition, as well as the growing investment opportunities arising from climate adaptation. |
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EU member states gave final approval to regulation that will ban the sale of carbon-emitting cars and vans after 2035. The vote finalised one of the most controversial elements of the EU’s Green Deal.
The EU agreed on measures requiring airlines to start using green aviation fuels from 2025. All aircraft fuel at EU airports will have to be blended with sustainable aviation fuels, starting at a minimum share of 2% in 2025 and rising every five years to 70% by 2050.
Mercedes-Benz announced a goal to achieve an 80% reduction in CO2 emissions from production by 2030. Mercedes also noted that it has been carbon-neutral at fully owned production sites worldwide since the beginning of 2022, largely due to a switch to renewable energy.
Carmaker Stellantis is testing synthetic e-fuels, made with renewable energy, on 28 types of internal combustion engines. The announcement came just weeks after the EU opened an exemption to its phaseout of carbon dioxide-emitting cars from 2035 for models with combustion engines running on e-fuels. The exemption was hailed by some as preserving technological freedom but viewed by others as a dangerous loophole.
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Thematic link: To find out more about the challenges and opportunities presented by the transport revolution, click here. |
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Italy's right-wing government backed a bill that would ban laboratory-produced meat and other synthetic foods, highlighting Italian food heritage and health protection. Under the proposals, breaking the ban would result in fines of up to EUR 60,000 (GBP 53,000).
South Africa’s government withdrew legislation intended to widen the number of species protected by more stringent laws, and it scrapped incoming laws pertaining to the management of elephants and hunting of leopards. The decision came after a legal challenge from Wildlife Ranching South Africa and the Professional Hunters Association of South Africa.
EU adopts law to fight global deforestation. The law obliges companies to ensure products sold in the EU have not led to deforestation and forest degradation. Companies will only be allowed to sell products in the EU if the supplier of the product issues an appropriate due diligence statement. Companies will have to verify that products comply with relevant legislation of the country of production, including on human rights.
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Thematic link: We believe that companies supporting the circular economy and leveraging the regenerative power of nature will be the future winners. To find out more about the circular economy as an investment opportunity, click here. |
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Wet wipes containing plastic will be banned in England, environment minister Therese Coffey told BBC News. The ban is part of plans to improve water quality, but opposition and environment groups criticised it as weak. Wet wipes flushed down toilets cause 93% of sewer blockages and cost around GBP 100m a year to clear up, according to Water UK. Around 90% of wipes contained plastic in 2021, although there are now alternatives on the market.
Sainsbury’s decision to replace the tray packaging for its beef mince range with vacuum packs has received negative feedback from customers – relating to both functionality and sustainability. The move was aimed at reducing the company’s plastic use by 450 tonnes annually. Customers have complained on Twitter about how the old packaging was mostly recyclable at kerbside, while the new packaging must be returned to the store to be recycled.
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Thematic link: Transitioning to a circular model for plastic represents a USD 1.2 trillion global economic opportunity. Click here for more information. |
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